Jay Walker on Technical Analysis

Jay Walker has a smart new investing blog at Confused Capitalist. Here he nails a well-known technician.

Here’s a recent prediction by a technical analyst with a national audience, relating to a security then priced by the market in the $69-$72 range for about two weeks … get ready … here it is ….
The share price has broken below the 10 and 20-day MA’s as is it retreats from an overbought condition. The daily MACD is issuing a sell signal thus consolidation of its recent gains may continue until the share price reaches the oversold lower Bollinger band at about $63, where it would offer a potential buying opportunity. It appears that the stock is in a corrective fourth wave of a five wave Elliot Wave advance. Once the correction is over it appears the stock’s technical target extends to $97, attainable over the next year.
So, I’ll try put that in English for you … it appears to be priced too high at $69-$72 currently – if it drops to $63, buy it, because it looks like it’s going to $97 within the next year.

Whenever I read technical analysis it always sounds like “this trend will continue what it’s doing until it stops what it’s doing…and that’s a reversal…unless, of course, it reverses again.”
When in doubt, I just follow the blue line.

Posted by on March 14th, 2006 at 3:35 pm


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